IT spending up overall, but lags for pharma

By December 21, 2012 at 12:56 PM

Corporate investment in information technology software and services across the United States grew in 2012, although spending was down in the pharmaceutical sector, according to a survey by Montvale-based Data Inc.

Data Inc. found 68 percent of the 200 firms polled — which span across the technology, financial services, manufacturing, telecommunications and government industries — said they have increased their IT spending from last year. But pharmaceutical companies produced opposite results, as 66 percent of those respondents said they decreased investment in IT this year.

"The major departures of pharmaceutical companies in the last few years have definitely had an impact on the IT space," said Maxine Ballen, president and CEO of the New Jersey Technology Council. "That statistic certainly jumps out at you, and we're unfortunately getting to see more of the trend going ahead."

Ballen said based on what she's heard from her members, IT spending has been flat, contrary to the national survey.

Ballen said a bright spot in pharma downsizing is "it's freeing up skilled labor that our employers should be taking advantage of," though she noted "the disconnect between the $20 an hour people were making in pharma and the $10 an hour compensation they're offered at technology firms is holding back employment growth in our industry."

Nationally, employment in the IT sector has increased 1.1 percent from 2010, according to the Data Inc. survey.

Looking ahead, 77 percent of the firms surveyed expect investment in IT products and services to increase in 2013, though technology research firm Gartner Inc. predicts nationwide spending will tick up only 2 percent.

Still, Arun Verma, president and CEO of Data Inc., said in a statement the forecasts "show positive trends for the information technology industry."

"I'm sure many IT executives are still cautious about their spending, but a variety of issues — from new regulations to new technologies and the need for efficiencies — are driving many technology investments," Verma said in a statement.

But in New Jersey, Ballen said the outlook for growth in IT spending next year is more marginal, as the NJTC expects a slight uptick between 1 percent and 2 percent — even with the health care, security and mobile sectors continuing to serve as major growth areas for the technology industry.

"People are still not feeling confident enough in the economy to purchase new IT equipment and services. There's still too much uncertainty, so the sales cycles are delayed," Ballen said. "This is a modest projection that feels very good for me, and it's what I hope will be reality this time next year. At least it's an up arrow and not a down one."